Clarity Act’s Failure Kicks Off Wave of Blame in Crypto World

The collapse of the Clarity Act has reportedly triggered a wave of finger-pointing among cryptocurrency executives and lawmakers.

This “blame game” began almost immediately after the digital assets legislation failed to clear the Senate earlier this month, The Wall Street Journal (WSJ) reported Sunday (Sept. 20).

Some pointed to ethics concerns among Democrats about President Donald Trump’s ties to the crypto sector. Others said the industry wasted its chance to close a deal on the bill before factors like the Iran war, inflation and artificial intelligence became larger priorities for Congress.

At the center of it all was Brian Armstrong, CEO of Coinbase, WSJ added. Head of the largest U.S. crypto exchange, he had emerged as the industry’s leader in the battle over the legislation. Sources familiar with the negotiations around the bill said few other figures, not including Trump, had as much influence as Armstrong.

Armstrong visited Washington 13 times between the 2024 election to the recent vote, with his lobbying team holding multiple weekly calls with industry members to discuss the bill. WSJ characterizes this as “an extraordinary level of engagement” on Armstrong’s part.

Sources said Armstong could, and did, veto parts of the legislation he didn’t approve of, frustrating the process.

“We had a lot of momentum in January,” said Brad Garlinghouse, CEO of Ripple, which backed the bill. “Then one group in our industry kind of shot ourselves in the foot.”

Coinbase has said Armstrong’s decision to yank his support for the Clarity Act in January was in the crypto sector’s best interests, having identified several parts of the bill he found problematic.

“We repeatedly took compromises in order to keep the coalition together and move the legislation forward,” said Faryar Shirzad, Coinbase’s chief policy officer, in a statement to WSJ.

Meanwhile, PYMNTS wrote last week that the demise of the Clarity Act effectively makes stablecoins “the presumptive standalone regulated U.S. digital asset,” and makes a series of recent developments more important that another group of crypto-related headlines.

These range from the U.S. Securities and Exchange Commission’s experiments with tokenized securities to Mastercard’s efforts to build new stablecoin capabilities to Circle’s launch of blockchain infrastructure for machines.

“Each market remains early, and none guarantees that stablecoins become the dominant settlement technology,” the report said.

“But the direction of travel is charting an inverse of crypto’s original proposition, where blockchain could create a financial system outside traditional finance. Instead, stablecoins are succeeding through the opposite strategy: embedding themselves inside it.”